Xbox 360 is a better gaming system hands down. I don't think anyone could possibly argue any other way. It's much more developer friendly, and as a result games look and run much better on Xbox 360.
i can argue the other way, and i will

The 360 is developer friendly, nobody will say different, but we need to look at it this way then. The 360 has easier hardware to code for, and has been around for a full year longer than the ps3, yet at the same time we have games like Killzone 2 that have the best sound i have ever heard in a game, amazing AI, incredible visuals, and actual volumetric effects (ill explain that in a min if you dont know what it means).
Multi-plat games often run better on the 360 because the devs are lazy. The 360 has 3 ppc cores in its cpu, the ps3 has 1 ppc core and 6 usable SPE's. What happens is that a game is made on the 360 because its easier, then ported to the ps3. The dev's, being too lazy to learn anything, try to cram all the instructions into the single ppc core and dont even bother with the spe's. When used properly, as seen in KZ2, Uncharted 2 (demos thus far, but still impressive), and GoW3 (ill post a vid), the results will blow the pants off of you and anyone standing by.
Now, Volumetric Effects. When something blows up it leaves smoke behind. It has been common practice in console games to have this smoke pre-rendered, meaning it just playes a little grenade exploding movie. KZ2 however actually renders the smoke as actual smoke. You can tell because the smoke disperses according to the environment around it. In the opening scene there is a bridge that gets destroyed and leaves quite a bit of dust behind. While the dust settles a ship flies through it and actually pushed the smoke out of the way and twists it with the turbines and whatnot. These effects are common on pc games, but KZ2 is the first console game to pull it off.
GoW 3:
http://www.gametrailers.com/player/45513.html
Be aware that this is rendered on the ps3 in real-time, meaning that actual gameplay will look exactly like this, or better seeing as they have until next march to polish it up.
Link for proof:
http://www.gamezine.co.uk/news/god-war-iii-trailer-confirmed-be-real-time-$1269022.htm
It also benefits from having games which ship on DVD rather than Blu Ray, because the Blu Ray drives in PS3 have a very slow read speed.
This is just incorrect, fanboy propagated FUD.
Read:
http://www.gamespot.com/pages/profile/show_blog_entry.php?topic_id=23916169&user=skektek
Alot of times the game loads slower because developers can keep the audio and video decompressed thanks to blu-ray. So you can either have faster loading with crappy audio, or slowing loading with better audio.
The main reason I prefer my Xbox over my PS3 for gaming though has to be the controller. Sony's controller is a decade old and it really shows. The two sticks are horrible for playing shooting games and the triggers are poorly designed. The left stick is also in the wrong place on the PS3 pad.
The sticks are better for shooters, imo. They are parallel instead of foring me to hold the controller differently with both hands which gets uncomfortable. The ps3's d-pad doesnt suck, so it gets points for that. I dont understand the fuss about the triggers. People say their fingers slip off, but i have never had that happen, even during Motorstorm sessions lasting hours.
I feel so much more comfortable playing games on my Xbox and I haven't even mentioned Live yet.
The first part is a preference, so that actually cant be argued. Live has very few features PSN doesnt and PSN wont run you $50 a year. That means i have an extra $50 in my pocket to get a game every year.
But then, Xbox 360 isn't a great media machine. It can't copy your videos to the hard drive for example, so it loses out on that one easily. No Blu Ray playback either.
It evens out though. Ps3's cost more and thus have more features. Too bad MS bet on the wrong horse with hd-dvd.
The main thing I now use my PS3 for is recording TV. I have the Sony PlayTV add on and I love how I can just record any TV show I want with it. It works really well and the interface is very responsive.
PlayTV looks interesting, but i would rather just build a linux box running MCE.
They ship out faulty hardware and they're trying to fix it. How much do you think it costs them to replace these systems? The sheer haulage costs, cracking them open and putting new chips in? The user doesn't pay a penny for this. I'd think one of the richest companies on earth would flip a magic fix switch if they could but they're seemingly doing the best they can short of a whole redesign of the system.
I know they fix it for free, but that doesnt make up for sending out **** to begin with. They sent their box out a year too early (apparently waiting for someone to engineer a heat sink wansnt a priority) just so they could lock in a large amount of the market. It worked for them, but i have a hard time forgiving a company that knowingly sold broken hardware. It is just a disgrace to companies that try hard to make something of quality.